NAREDCO President Dr. Niranjan Hiranandani Welcomes FM’s Income Tax Relief

Finance Minister Nirmala Sitharaman has announced income tax relief for developers and home-buyers in order to boost the demand for residential real estate, as part of Atmanirbhar 3.0 stimulus measures announced to push economic growth. Under the move, the first-time buyers of houses costing up to ₹ 2 crore will get income tax relief of up to 20 per cent and this will be available till June 30, 2021.

The Finance Minister also announced doubling the differential between circle rate (stamp duty value) and agreement value (purchase value) for primary sale of residential units of up to ₹ 2 crore, from 10 per cent to 20 per cent.  As a result, buyers of these units will get tax relief of up to 20 per cent under Section 56(2)(x) of IT Act, she added.

The finance minister also emphasized that the tax relief will help the middle class which wants to buy when the housing sector is sitting on inventories.

Commenting on the recent announcement by the Finance Minister Dr. Niranjan Hiranandani, President- NAREDCO, said:

“Differential above 10 per cent between circle rates and agreement value translates into tax penalties under Section 43CA of the Income Tax Act. This has been a major stumbling block for price rationalization. This pinches, especially when it comes to liquidating unsold inventory. Industry bodies like NAREDCO have been pointing out the urgency with which this needs to be sorted out, and the Hon’ble Finance Minister, in a limited-period offer (up to 30 June 2021), has enhanced this differential from 10 to 20 per cent. This is welcome. 

Niranjan Hiranandani/Twitter
Niranjan Hiranandani/Twitter

The FM also mentioned a cap on the flat value to be eligible for this – Rs. 2 crore. This will result in most projects in Metro Cities not being able to take advantage of this, it has consistently been pointed out by industry bodies that price points in Metro Cities need to be kept in mind while offering any such relaxation.”

Dr. Hiranandani went on to add that the ideal situation would have been one where this relaxation would be applicable to commercial real estate transactions as well.

 “Real estate as an industry and end-users, both would benefit if these two suggestions can be incorporated. Funding issues have been a major challenge for real estate.

Finance Minister Nirmala Sitharaman’s announcement, about additional funding of Rs. 18,000 crore for PM Awaas Yojana-Urban will add to the sparkle this festive season. This is over and above the Rs 8,000 already allotted this year, and will translate into more homes for home seekers, more employment opportunities as also good business for suppliers and industries peripheral to real estate and construction.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here